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  • 7/28/2019 27 Agriculture and Land Use - Demand for and Supply of Agricultural Commodities

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    Land Use Policy 26S (2009) S230S242

    Contents lists available at ScienceDirect

    Land Use Policy

    j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e / l a n d u s e p o l

    Agriculture and land use: Demand for and supply of agricultural commodities,

    characteristics of the farming and food industries, and implications for land use

    in the UK

    A. Angus a,, P.J. Burgess a, J. Morris a, J. Lingard b

    a Cranfield University, Cranfield, Bedfordshire MK43 0AL, United Kingdomb School of Agriculture, Food and Rural Development, Newcastle University, Newcastle upon Tyne NE1 7RU, United Kingdom

    a r t i c l e i n f o

    Article history:

    Received 21 September 2009

    Accepted 25 September 2009

    Keywords:

    Agriculture

    Land use

    Farm incomes

    Food commodity prices

    Agri-environment

    a b s t r a c t

    Agriculture is the largest type of land use in the UK, accounting for about 77 per cent of the total area,

    compared with an average 50 per cent for the EU27. But in common with most high-income countries,

    agricultures contribution to UK GDP and employment is low, at about 0.5 and 1.8 per cent, respectively,

    although the regional importance of the sector (and its associated food and farming industries) varies

    considerably.

    Of the 17.5 million ha used for agriculture, about 28 per cent is allocated to crops, and 67 per cent

    is grassland. The grassland includes 4.4 million ha of sole-owned rough grazing and 1.1 million ha of

    common land in mainly upland disadvantaged areas, primarily used for beef and sheep production.

    This has a major influence on land use, especially in the northern and western parts of the UK.

    From the 1930s until the mid-1980s, UK policy promoted increases in agricultural productivity to feed

    the nation from its own resources. An array of income and production support measures encouraged

    intensive farming, including a relative switch to arable farming in eastern areas. Since the early-1990s,

    policies havesoughtsimultaneously to makeUK agricultureinternationally competitiveand environmen-

    tally benign. Thesepolicies,evident in theAgenda 2000 Reforms of theCommon AgriculturalPolicy, pointthewayforwardfor thefuture.It islikely that a greater distinctionwill emergebetweenpolicies to protect

    natural resourcesand enhancethe flow of non-market ecosystemservicesfrom ruralland, andagriculture

    and food policies intended to encourage an appropriate proportion of national food requirements to be

    met from domestic sources.

    It seems likelythat over thenext 50 years, theUKs land area will be required to deliver an increasingly

    diverse range of private and publicgoodsto meet growing human needs and aspirations. This will require

    a balance of policy-driven goals and market forces. It will also need a much improved understanding of

    the trade-offs between food production and environmental goals and of the institutional arrangements

    required to achieve a balance of economic, social and environmental outcomes.

    2009 Queens Printer and Controller of HMSO. Published by Elsevier Ltd. All rights reserved.

    Introduction

    Agriculture is the largest single type of land use in the UK.In 2008, approximately 77 per cent of the total area of the UK

    (17.5million ha) was used for agricultural purposes (Defra, 2008c).

    This compares with 50 per cent in the EU27, and 54, 47 and 50 per

    cent for France, Germany and Spain, respectively (Eurostat, 2009).

    While the Government Office for Science commissioned this review, the views

    are those of the author(s), are independent of Government, and do not constitute

    Government policy. Corresponding author at: Natural Resource Department, Building 42a, Canfield

    University, Bedfordshire MK43 0AL, United Kingdom. Tel.: +44 1234 750111.

    E-mail address: [email protected](A. Angus).

    This means that UK rural land use, and the UK landscape in

    lowland and upland areas, are largely the products of agricultural

    management, which has evolved over many centuries. They areparticularly the result of government agricultural policies over the

    past 70 years. These originally focused on food production and

    have only more recently given prominence to environmental pro-

    tection and the wide range of environmental services provided by

    farmed areas. Likewise, future land use in the UK will be affected

    by change in the food and farming sectors, and by priorities in the

    management of natural resources and the environment.

    This paper reviews the main changes in UK agricultural land

    use and farming systems over the last 50 years and the underlying

    causes and effects. The factors shaping the demand for and sup-

    ply of agricultural commodities are explored, including changes in

    0264-8377/$ see front matter 2009 Queens Printer and Controller of HMSO. Published by Elsevier Ltd. All rights reserved.

    doi:10.1016/j.landusepol.2009.09.020

    http://www.sciencedirect.com/science/journal/02648377http://www.elsevier.com/locate/landusepolmailto:[email protected]://localhost/var/www/apps/conversion/tmp/scratch_13/dx.doi.org/10.1016/j.landusepol.2009.09.020http://localhost/var/www/apps/conversion/tmp/scratch_13/dx.doi.org/10.1016/j.landusepol.2009.09.020mailto:[email protected]://www.elsevier.com/locate/landusepolhttp://www.sciencedirect.com/science/journal/02648377
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    A. Angus et al. / Land Use Policy 26S (2009) S230S242 S231

    agriculturalpolicy andmarketsand theorganisation of thefarming

    and food industries. Forecasts of agricultural landuse are reviewed,

    providing perspectives on how the main drivers of change will

    affect future land use in the UK. Although they are relevant to this

    discussion, technological change and climate change are not dis-

    cussedhere.The interested readeris directed to Burgess and Morris

    (in press) and Rounsevell and Reay (in press).

    UK agricultural land use and economic importance

    Current UK agricultural land use

    Table 1 shows current agricultural land use in the UK. About

    28 per cent of the UK agricultural area is associated with arable

    cropping, including fallow land, and about 67 per cent with grass-

    land, mostly permanent pastures. Farm woodland and other land

    occupies about 6 per cent of the total agricultural area. In 2002,

    8.7 million ha (42 per cent of the agricultural area) of UK upland,

    defined as land more than 240 m above sea level, was classed

    as less favoured. These areas as regarded as disadvantaged from

    an agricultural and economic perspective and are mostly grazed

    for extensive agricultural production. Farmers there have received

    additional income support (Defra, 2002). Table 1 also shows agri-

    cultural land use for England, where arable crops and grassland

    account for almost equal proportions of the total land area.

    The proportion of the land area used for agricultural purposes

    has declined steadily over the past century, mainly in response to

    demands for other uses, predominantly urban and, in some areas,

    forestry. In England (Fig. 1), agricultural land declined by about 12

    Table 1

    Agricultural land uses types in the UK and England in terms of area and proportion

    of the total agricultural area (Defra, 2008a,c).

    Land use UK England

    (000 h a) (%) (000 h a) (%)

    Crop cultivation 4,740 27 4031 43Bare fallow 195 1 159 2

    Temporary grass under 5 years old 1,141 7 636 6

    Grass over 5 years old 6,036 35 3428 37

    Sole right rough grazing 4,359 25 578 6

    All other land and Woodland 993 6 505 6

    Total agricultural land 17,464 100 9339 100

    Common land for grazinga 1,238 428

    Total land used of agricultural purposes 18,702 9767

    a Common land is not classified as agricultural land.

    Fig. 1. Agricultural land use in England for selected years between 1900 and 2008.

    Fig. 2. Agricultural land use in Wales for selected years between 1900 and 2007.

    per cent over the period 19002008, and by about 7 per cent since

    1950 (MAFF, 1968; Defra, 2008a). This equates to a total decline of

    700,000ha, equivalent to 6500 ha per year leaving agriculture in

    England.

    From the1950s through to themid-1980s, reductions in farmed

    areas were more than offset in output terms by increased yields,

    associated with improvements in crop and livestock genetics,

    nutrition, and health and land improvements such as drainage (see

    Burgess and Morris, in press). Wheat yields per hectare and milk

    yields per cow doubled during the period 19602000. Agricultural

    systems tended to intensify in areas where they were most suited.

    There wasa netchangefrom grasslandto arableproduction in Eng-

    land and vice versa in Wales (Morris, 1992; Morris et al., 2005)

    (Fig. 2). UK total agricultural output (weighted by value) rose by

    almost 180 per centbetween the mid-1950s and a peak in the mid-

    1980s, after which it declined slightly, mainly in response to policy

    changes.

    Table 2 shows changes in the distribution of crop and grassland

    areas in theUK between 1995 and2008, reflectingthe relative prof-

    itability of farming as a whole and of particular crop and livestock

    enterprises. The decline in farmed areas, especially in arable crop-ping prior to 2000, reflects falling real product prices, anddeclining

    farm incomes, which caused farmers to leave the industry. As the

    Policy Commission on the Future of Farming and Food (2002) com-

    mented at the time, landabandonment seemed a possible outcome.

    However, in the short term, agriculturalland andotheragricultural

    assets, including farmer skills, have limited alternative uses. This

    results in supply-side inertia whereby farmers continue to operate

    unprofitable businesses because economic adjustment is painful

    and resource specificities prevent movement to non-agricultural

    uses. More recently, the strengthening of crop prices, especially

    for cereals and oilseeds and the curtailment of the set-aside pro-

    gramme that took cereal land temporarily out of production, have

    led to an increase in the areas of cereals and oilseeds. By compari-

    son, sugar beet plantings have declined in response to falling sugarsupport prices, while relatively low livestock prices and high feed

    prices have reduced the profitability of grassland farming. Some of

    the increase in the grassland area since 2005 shown in Table 2 is

    attributable to increased registration of smallholders under the EU

    single farm payment scheme.

    The underlying message here is that farmers are responsive

    to prices, whether market- or policy-driven. They are particularly

    responsive to upward movements in prices and changes in relative

    commodity prices. As we have seen, they are much less responsive

    to declining prices because of the inherent immobility of agricul-

    tural assets, including land, and the lifestyle and taxation benefits

    associated with farming.

    Thus for most of the postwar period of declining commodity

    prices in real terms, the farming industry has faced a continuing

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    S232 A. Angus et al. / Land Use Policy 26S (2009) S230S242

    Table 2

    UK agricultural land use (000 ha) and livestock numbers (thousands) for selected periods between 1979 and 2008.

    Crops Average of 19791981 1990 2000 2008 Proportional change from

    19791981 to 2008 (%)

    Wheat 1,435 2,014 2,086 2,080 45

    Barley 2,335 1,518 1,128 1,032 56

    Oats 142 107 109 135 5

    Other cereal crops 20 21 26 27 35

    Oilseed rape 97 390 332 598 516Sugar beet not for stockfeeding 212 194 173 120 43

    Peas for harvesting dry and field beans 78 216 208 148 90

    Linseed 71 16

    Other crops 198 132 192 269 36

    Potatoes 200 177 166 144 28

    Horticulture 270 208 172 170 37

    Grassland

    Permanent grass 5,145 5,316 5,363 6,036 17

    Temporary grass 1,933 1,606 1,226 1,141 40

    Rough grazing 5,093 4,965 4,445 4,359 14

    Set-aside 0 72 567 0

    Common rough grazing (estimate) 1,213 1,236 1,228 1,238 2%

    Total agricultural area 18,899 18,884 18,311 18,702 1%

    Livestock

    Total cattle and calves 13,384 12,059 11,135 10,107 24%

    Dairy cows 3,237 2,848 2,336 1,909 41%Beef cows 1,481 1,632 1,842 1,670 13%

    Total sheep and lambs 31,163 43,799 42,264 33,131 6%

    Total pigs 7,836 7,449 6,482 4,714 40%

    Total fowl 125,712 124,615 154,504 166,200 32%

    challenge of structural adjustment. It is these economic forces that

    have caused the drift from the land of agricultural labour which

    occursin alldeveloped economies, mainlybecause as general pros-

    perity increases, people tend to spend a declining proportion of

    their extra income on raw food.

    In the livestock sector, the combination of improved produc-

    tivity (Burgess and Morris, in press), with the imposition of milk

    quotas, the abolition of the Milk Marketing Board in 1993, poor

    financial returns, and static or decreasing demand have caused a

    41 per cent decline in dairy cows between 19791981 and 2008

    (Table 2). Similarly, there has been a reduction in the number of

    beef cattle following the BSE crisis in the late-1990s and the reduc-

    tion and eventual removal of specific beef production incentives

    in 2005. The UK sheep flock peaked in 1992 at 44 million, because

    of a favourable EU sheep meat regime. Following the end of this

    regime, sheep numbers declined to 33 million in 2008.Pig numbers

    have decreased rapidly over the period shown in Table 2, largely

    as an effect of high feed prices, disease outbreaks and the cost of

    implementing new welfare standards for pigs. The rapid increase

    in poultry is a result of changing diets, with white meat becoming

    more popular than beef and lamb with UK consumers.

    The pattern of agricultural land use is also influencedby a com-

    bination of climate, soils and topography. In England and Wales,

    this results in a relative concentration of grassland and livestockfarming in the north and west, and arable farming in the east and

    south (Fig. 3). Horticulture, including the production of high-value

    vegetable and salad crops, is mainly concentrated in areas of peat

    or light mineral soils, usually involving irrigation and controlled

    drainage.These aremainly in East Anglia, theWest Midlands,south

    west Lancashire, and south Yorkshire.

    The economic performance of UK agriculture and implications for

    land use

    In line with other EU and OECD member states, agricultures

    share of UK national economic output and employment has

    declined over time as overall prosperity has increased. In 1900,

    UK agricultures share of GDP was about 11 per cent ( National

    Statistics, 2003). In 2007 thefarming sectorin theUK accountedfor

    5.5 billion gross value added, equivalent to about 0.5 per cent of

    total UK GDP. Employment in farming provided 531,000 full-time

    equivalent jobs, about 1.8 per cent of the UK workforce. As a com-

    parison, agricultures share of GDP in the EU-15 and in the US were

    1.7and1.4 percent,respectively,in 2002(Normile and Price, 2004).

    Crop outputs excluding horticulture totalled 3.5 billion in

    2007. They form 22 per cent of the total output of UK agriculture,

    which was valued at 15.7 billion, excluding single farm payments

    and subsidies of 2.9 billion (Defra, 2008a,b,c,d,e). This output

    occurs on about 27 per cent of the crop and grass area excluding

    roughgrazing. Horticulture at 2.3billionaccountsfor about15 per

    centof total output onabout 1.3 per cent ofthe cropand grass area,

    confirming the relatively high-value per hectare of vegetable and

    fruit production. Meat production (e.g. cattle, sheep,pigs andpoul-

    try) contributes about 4.4 billion or 28 per cent of the total output

    Fig.3. Cerealcrops andgrasslandas a proportion ofagriculturallandacrossEngland

    (Defra, 2008a).

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    A. Angus et al. / Land Use Policy 26S (2009) S230S242 S233

    Table 3

    Thenumber ofUK agriculturalholdings (000) within foursizegroupingsfor selected

    years between 1990 and 2007.

    Size (ha) 1990 1993 1995 1997 2000 2003 2005 2007

    >50 81.0 79.9 80.1 78.4 75.5 75.4 74.5 74.0

    2050 60.7 58.9 56.5 55.4 47.8 45.0 46.7 46.5

    520 67.9 67.6 65.6 63.1 56.1 56.7 58.7 60.1

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    S234 A. Angus et al. / Land Use Policy 26S (2009) S230S242

    Table 5

    Area of uncropped land (000 ha) in the UK for selected years between 1985 and

    2008.

    1985 1990 1995 2000 2008

    Bare fallow 41 68 43 37 195

    Set-aside 0 72 734 495 0

    Total uncropped 41 140 777 532 195

    Farm woodland 500 750

    Source: MAFF (1989), Defra (2008a).

    ers to grow oilseed and protein-rich crops, such as oilseed rape,

    linseed and pea and bean crops.

    These successive policy changes have impacted significantly

    on the UK landscape. The drive for food production between

    1940 and 1984 had led to substantial areas of permanent pasture

    being ploughed and drained, usually with grant support. The rapid

    increase in sheep numbers in both upland and lowland areas dur-

    ingthe 1980s brought aboutby ewesubsidies wascurtailed in 1992

    by regional ceilings. The increased support for protein and oilseed

    crops has meant that oilseed rape and field beans have become

    important new crops in the UK landscape.

    The introduction of compulsory set-aside in 1992 led to alarge increase in the fallow arable land in the UK. Conversely

    the removal of compulsory set-aside in 2008 in response to an

    increase in cereal prices caused a rapid decline in the area set-

    aside. The area of bare fallow increased rapidly in 2008 because

    land voluntarily left as set-aside was reclassified as bare fallow

    (Table 5).

    From food supply to ecosystem services

    During the 1970s and 1980s, numerous commentators high-

    lighted the negative environmental effects of intensive farming

    (Nature Conservancy Council, 1977; Shoard, 1980; Body, 1982),

    including loss of habitats andwildlife, soil erosion andwater pollu-

    tion. In response to this and to pressure from the UK, the EuropeanCommunity accepted the concept of Environmentally Sensitive

    Areas in 1985, and a broad suite of accompanying measures

    was introduced in the CAP reform of 1992 to promote the agri-

    environment and farm woodlands. Through a range of schemes,

    participating farmers were paid for managing a proportion of

    their land to produce ecosystem services rather than food. This

    included support for farmers to moveland fromproductive agricul-

    ture into management practices that supported local biodiversity,

    such as the Environmentally Sensitive Areas (ESA) and the Coun-

    tryside Stewardship (CS) schemes. Incentives were also offered for

    farmers to switch to organic systems, and for the afforestation of

    agricultural land through initiatives such as the Farm Woodland

    Scheme (FWS), the Woodland Grant Scheme (WGS), and the Farm

    Woodland Premium Scheme (FWPS).Since 2000, European Union support for the rural sector has

    been delivered through two main mechanisms. Pillar I involves

    support for agriculture and Pillar II provides support for ruraldevel-

    opment, including agri-environmental interventions. In 2003, the

    CAP reformed key agricultural subsidies under Pillar I (such as the

    Arable AreaPaymentand the Beefand SheepPremiums in England),

    which were linkedto production with a SingleFarm Payment (SFP).

    This payment was not linked to a particular type of production, but

    did require cross-compliance, an adherence to EU environmen-

    tal, food safety, animal welfare standards and regulations, and the

    need to keep farmland in Good Agricultural and Environmental

    Condition. This is defined at a national level, andincludes soil pro-

    tection, maintenance of soil organic matter and soil structure, and

    maintenance of habitats and the landscape.

    Agricultural commodity prices, and the incentives for agricul-

    tural production in the UK, are now largely determined by world

    market conditions and farm and rural income support is decou-

    pled from farm production levels. This shouldprevent thewasteful

    and inefficientbuild-up of agricultural surpluses whichbroughtthe

    CAP into disrepute in the 1980s.

    Pillar II of the CAP relating to rural development includes

    agri-environmental and afforestation measures. Separate rural

    development programmes exist for England, Scotland, Wales and

    Northern Ireland. Since 2005, the agri-environmental measures

    for England include Environment Stewardship which is steadily

    replacing the ESA and CS schemes. In England in 2008, 5.3 million

    ha were under environmental stewardship, 6 per cent of which

    was in the higher tier. The total land area under agri-environment

    schemes in theUK wasabout8.7million ha in 2008,compared with

    only 175,000ha in 1992.

    Over time, the proportion of total agricultural funding allocated

    to the Single Farm Payment is being reduced by the modulation

    of funds to rural development measures, in other words from Pillar

    I to PillarII. Farmers arenow paid to manage their land accordingto

    a set of rules,regardless of what or how much is produced on-farm.

    This marks a shift in public financial support from the production

    of food and fibre to the conservation of natural resources and the

    environment.

    Agricultural prices, farm incomes and land values

    World market agricultural prices have fallen in real terms for

    much of thepast70 years,withthe exceptionof shortlivedspikes in

    the early-1970s, the early-1990s and more recently the 20072008

    period, mainly caused by supplydisruption at a globalscale (Piesse

    and Thirtle, 2009). Agricultural prices for UK farmers have mir-

    rored these trends, especially since the early-1990s, but have been

    modified by the rate of farm support within the European Union.

    Fig. 4 shows price trendsfor selected major commodities forthe

    UK from 1988 to 2008. Over this period, prices were relatively low

    between 1998 and 2004 before the recent price spike (Piesse andThirtle, 2009). Formanyproducts,priceshavereturnedto thelevels

    experiencedin early- to mid-1990s, when prices increased because

    of a weak pound relative tothe currency of other EU competitors,as

    well as strong food demand from Asia (Defra, 2009b; USDA, 2009).

    The combination of a stronger pound, falling demand in the wake

    of the Asian financial crisis and a liberalisation of EU agriculture

    combined to depress prices from the late-1990s until 2005.

    Fig. 5 shows how farm incomes have been affected

    by price variations, showing volatility around a gener-

    ally declining trend. In 2008, Total Income from Farming

    Fig. 4. UK agricultural price index for selected products 19882008. Source: Defra

    (2008c).

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    A. Angus et al. / Land Use Policy 26S (2009) S230S242 S235

    Fig. 5. Total Income from Farming (TIFF) 19732008. Source: Defra (2009a,b,c).

    (TIFF) was about 60 per cent lower in real terms than

    in 1973.

    Recent changes in the value of land

    Agricultural land prices tend to reflect the profitability of farm-

    ing, including the effects of subsidies and income support. But in

    recent years, distortions in UK land markets have kept agricultural

    land prices at levels much higher than their agricultural income

    earning capacity would imply. Factors at work here include lim-

    ited offerings of land for sale (typically less than 0.2 per cent of

    the total land area each year), strong demand for small parcels

    of agricultural land from urban dwellers, and tax advantages

    of land ownership. Fig. 6 shows how the sale value of agricul-

    tural land rose in the early-1990s during a period of relatively

    favourable commodity prices (Fig. 4) and farm incomes (Fig. 5)

    but levelled off and remained stable between 1996 and 2004,

    even during this period of unprecedented low prices and incomes.

    Where agricultural land included a house, the value per hectare

    of that land increased by 60 per cent between 1995 and 2004(Fig. 6).

    More recently, the value of agricultural land in England and

    Wales has more than doubled between 2004 and 2009 (Fig. 7),

    partly in response to recent increases in food commodity prices

    and farming profits. In 2009, prices for agricultural land in Eng-

    land and Wales with vacant possession are about 13,00015,000

    per hectare for arable land, reflecting the presence of keen local

    buyers as much as the quality of agricultural land. RICS (2009)

    reported an increase in 2008 in the number of purchases of land

    by adjacent family managed farms in order to maintain economies

    Fig. 6. Agricultural land values in England (19932004) at 2007 prices (Defra,

    2008c).

    Fig.7. Value of freeholddairy, arableand hillland withoutbuildings in Englandand

    Wales (Valuation Office Agency, 2009).

    of scale and benefit from the exemption of farm land from

    inheritance tax.

    Power relations in UK food and farming

    In analysing competition in particular industries, Porter (1998)

    identifies five sources of competition. The key areas in the agri-

    cultural supply chain relate to the buyer power of consumers and

    supermarkets, the power of agricultural supply companies, inter-

    national competition including the role of biofuels, new entrants,

    and rivalry between existing agricultural businesses (Fig. 8).

    Buyer power

    The final buyers of agricultural products are consumers. How-

    ever, their choices are increasingly mediated through a limited

    number of supermarkets. The generic demand for food in the UK

    is relatively unresponsive to changes in prices, it is price inelas-

    tic (Lechene, 1999; Tiffin and Tiffin, 1999) (Table 6). Price changes,

    whether up or down, bring about proportionately small changes in

    the quantity of food purchased. For instance, a 1 per cent increase

    in the price of fresh fruit would cause an 0.29 per cent fall in

    the quantity demanded. Conversely, a 3.4 per cent fall in price

    (1/0.29) is needed to raise demand by 1 per cent. Because of this

    relatively constant and inelastic demand, farmers can experience

    considerable variation in prices and incomes, for example when

    year-on-year changes in weather patterns affect production. Oscil-

    lating and unstablefood prices, and the importance of securing food

    supplies for Britains industrial workforce, were the main reasons

    for the Government introducing Agricultural Marketing Boards in

    the 1930s.

    The demand for food is also income inelastic, that is, expendi-

    ture on raw food as a whole does not keep pace with increases inincome. Drawing on the Household Food Survey, Lechene (1999)

    suggests that a 1 per cent increase in average income will increase

    Fig. 8. Five competitive forces within in the UK agricultural land use sector.

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    Table 6

    Own price, income and cross-price elasticities of demand for selected food products consumed in UK homes.

    Own price

    elasticity

    Income

    elasticity

    Cross-price elasticitya

    Carcase

    meat

    Other meat and

    meat products

    Milk and

    cream

    Bread Fresh

    fruit

    Fresh green

    vegetables

    Carcase meat 0.69 0.2 0.26 0.05 0.12 0.17 0.11

    Other meat and meat products 0.52 0.19 0.53 0.14 0.11 0.11 0

    Milk and cream

    0.36 0.05 0.04 0.38

    0.14

    0.27

    0.02Bread 0.4 0.12 0.07 0.03 0.07 0.1 0.05

    Fresh fruit 0.29 0.3 0.11 0.03 0.14 0.1 0.04

    Fresh green vegetables 0.66 0.27 0.02 0 0 0.02 0.01

    aFor entries under cross-price elasticity: entry on a row is the cross-price elasticity with respect to the good in the column. For instance, the cross-price elasticity of carcase

    meatin respect to other meatand meatproducts is 0.26. A positivecoefficient indicatesthat a productacts asa substitute foranother; forinstance, anincreasein carcase meat

    pricecauses people to switch to consumptionof other meats andmeat products.A negativecoefficientfor cross-priceelasticity indicatesthat theproducts arecomplimentary;

    where the goods are consumed together. For instance, an increase in price causes a decline in quantity demanded (source: Lechene, 1999).

    total food demand by 0.2 per cent. But the increase in demand

    will not be uniform across all categories of foods and all income

    levels (Defra, 2008e). Low-income households tend to buy more

    bread and cereals, milk, cheese and eggs, sugar and confectionery

    but less meat, vegetables, fruit and other foods than more affluent

    families. Increased average income, together with increased food

    choices and changing tastes and lifestyles, were associated with a30 per cent fall in milk and dairy consumption over the past 30

    years (Defra, 2008b). Bread purchases have decreased by 15 per

    cent and fresh potatoes by 27 per cent in the past 10 years ( Defra,

    2008b) while purchases of fruit and vegetables have increased by

    8 per cent over the same period. Quantities of fruit and vegetables

    purchased by all households and by low-income households have

    both risen by 9 per cent since 2001 (Defra, 2006c).

    Similarly, fresh red meat sales have fallen by 40 per cent over

    the past 30 years, but have remained steady over the past decade.

    This reflects theimpact of changing food tastesand lifestyles. There

    have been large fluctuations in the type of meat bought because of

    health concerns, such as BSE, but in general meat consumption has

    remained relativelysteady.The majorchange has been the increase

    in poultry consumption, whichhas surpassedconsumption of othermeats in the UK since 2000 (Foster and Lunn, 2007). Recent con-

    cerns about the growing incidence of obesity have prompted calls

    for healthier eating, with implications for the balance of livestock,

    fruit and vegetables products in the national diet (Foresight, 2007).

    Although income elasticity is low for raw, unprocessed food

    (Table 6), it is much higher for total food expenditure including the

    convenience and recreational components provided by the food

    processing and catering sectors. Farmers can offset the disadvan-

    tages of the market place for raw, farm-gate food by adding value

    by movingup thesupply chain,by undertaking processingor direct

    sales themselves, or by focusing on niche, quality produce rather

    than bulk produce.

    There isalso anincreasing trendtowardsdemand forfoodwhich

    meets high ethical standards and animal welfare considerations,which protects the environment, and which respects the rights

    of people involved in food production, particularly in developing

    nations. Defra (2007) shows an increasing demand between 2000

    and 2007 for local food and for food from organic, free range and

    other systems orientated to animal welfare, as well as for fair trade

    foods. Over a third of sales of ethical foods are now organic. Sales

    of organic foods increased by nearly 20 per cent between 2005 and

    2006 to a market value of 1.7 billion (NFU, 2008). It is unclear as

    yet how these trends will affect aggregate land use, but increas-

    ing quantities of organic and food from animal welfare systems

    wouldrequiremore landthan conventional agricultural production

    systems because of relatively lower yields.

    A number of changing demographic factors, some of them

    counteracting each other, could influence future demand for food

    (National Statistics, 2009). Increased participation in the workforce

    by women, decreasinghouseholdsize and more individualistic eat-

    ing patterns are driving demand for convenience foods and meals

    with smaller portions (Buckley et al., 2007). Conversely, an age-

    ing population with more pensioners who have low incomes but

    plenty of time to cook, could increase the demand for raw food

    and for cheaper options. Renewed connectedness between peo-ple and food has increased interest in local foods, encouraging

    farmers markets, and a resurgence in allotments and urban agri-

    culture. Concerns about rising food prices, however, does not fit

    comfortably with the finding that 30 per cent of food purchased

    by households is thrown away, and that most this waste (19 per

    cent of purchases) could have been avoided (WRAP, 2008; Cabinet

    Office, 2008). Losses in the catering sector and the food chain

    as a whole would increase this estimate of total loss ( Lundqvist,

    2008).

    Over thepasttwo decades, marketpower hasmovedfromfarms

    to the retail sector and consumers (IAASTD, 2009). Large super-

    markets have delivered increasing convenience and choice to the

    sector. The number of product lines in supermarkets has increased

    from about 5000 in the 1970s to over 40,000 currently (Foster andLunn, 2007). They have taken an increasing share of the UK food

    market (Frances and Garnsey, 1996; FAO, 2005), out-competing

    smaller and more specialist food retailers. Defra (2006c) reported

    that approximately 75 per cent of food sales were made by super-

    markets or superstores and only 7 per cent attributed to small

    traditional stores. The supermarket sector is also highly concen-

    trated. Four companies account for approximately 74 per cent of

    all supermarket food sales.

    As a consequence, large supermarkets exert significant power

    over their suppliers, including farmers (Dobson et al., 2003). The

    OECD (2006) explained the process of retail market capture and

    cited several practices that supermarkets use to exert market

    power, such as changes in contract conditions at short notice,

    breaches in contract, late payments and buy-back clauses forunsold products. Lloyd and Morgan (2007) concluded that these

    practices cause supermarket and farming profit margins to diverge.

    In 1988, farmers received 47 per cent of the final market value

    of retailed fresh foods, but by 2008 this had fallen to 37 per cent

    (Defra, 2008c). However, others point to an improvement in the

    relationships associated with dedicated supply chains, such as

    supermarket-operated quality assurance and traceability schemes

    for livestock and vegetable produce. The share of farm-gate output

    in thefinalretail price of differentforms of food is also variable,typ-

    ically being 4051 per cent for most fruits and vegetables, 4750

    per cent for beef and lamb, and 35per cent for milk (Defra, 2008c).

    Crude price comparisons can also be misleading because differ-

    ent amounts of resources are committed to marketing different

    products and adding value to them.

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    McCulloughet al. (2008), WorldBank (2007) and IAASTD (2009)

    report that the dominance of supermarkets in the agri-food chain

    for high-value produce tends to favour larger producers. In some

    cases, farmers have responded to the dominance of supermarkets

    by creating co-operative groups, farmer wholesale companies or

    larger farm enterprises. This is likely to encourage further increases

    in average farm size or more collaborative ventures, as produc-

    ers seek economies of scale in production, and in the case of fresh

    produce, economies of marketinginto the supermarket-dominated

    supply chain.

    Rivalry between agricultural producers

    Withalmost 200,000farmersproducingmainly bulk,low-value,

    high volume, high transportcost, commodities, thereis little rivalry

    between producers themselves. Most rivalry is associated with

    gaining and maintaining market outlets to supermarkets and pro-

    cessors for high-value produce. There is also rivalry at the national

    scale between domestic production and imports.

    New entrants

    Competition from new entrants in the agriculturalsector is low.

    The returns from agricultural production do not justify the invest-

    ment in purchasing or renting agricultural land. In fact the issue is

    not competition from new entrants into the sector, but the loss of

    commercial farmers and agricultural land from it. Existing farmers

    can find it attractive to release the capital in their land by sell-

    ing it for non-agricultural uses such as housing development, or

    converting it for amenity use such as paddocks for horses.

    Supplier power

    Agriculture is a primary industry and is less exposed to changes

    in input costs than many other industries. However, the profitabil-

    ity of some sectors, pig and poultry production in particular, is

    dependent on the supply of cheap animal feed. In the past century,

    agriculture has also become reliant on cheap energy, for run-

    ning agricultural machinery and for nitrogen fertiliser production.

    Between 2005 and 2008, prices for fertilisers and soil improvers inthe UK increased by 270 per cent (Defra, 2009c), in part a result of

    high energy prices but also because of a lack of competition in the

    domestic fertiliser supply sector.

    A long-term increase in the price of fossil fuel will affect the

    viability of current energy-intensive farming systems that are

    dependent on large inputs of inorganic fertilisers and pesticides,

    on andthe use of farm machinery. Energyefficiencyconsiderations

    may encourage less intensive farming systems and lower yields,

    implying greater agricultural land use to maintain total agricultural

    output (Sustainable Development Commission, 2007).

    International competition

    A key consideration for UK agricultural land use is the capacity

    of UK agriculture to compete on the international market. Systemsthat are internationally competitive can secure additional income

    from selling in international markets; systems that are not com-

    petitive are likely to face competition from imports. Since 2002,

    the Common Agricultural Policy has sought to make EU, including

    UK, agriculture internationally competitive, while simultaneously

    ensuring food security though a balance of domestic and foreign

    sourcing.

    Atthe globalscale, demandfor food is closely linkedto increases

    in the economic prosperityof populations. Between 2004and 2006,

    22 of the worlds 34 most food-insecure countries experienced

    gross domestic product increases of 516 per cent (IFPRI, 2007),

    with a resulting shift from basic staples such as cereals to more var-

    ied, protein-rich diets, especially vegetables, fruits, meat, dairyand

    fish. Between 19641966 and 19971999, consumption of meat

    per capita developing countries increased by 150 per cent, and of

    milk and dairy products by 60 per cent (FAO, 2005). Milk and dairy

    consumption is expected to rise by 1 per cent per year through

    to 2019 (Trostle, 2008). By 2030, it is forecast that per capita con-

    sumption of livestock products could rise by a further 44 per cent

    from current levels(WHO,2003). But demand for otheragricultural

    commodities could decline. IFPRI (2007) predicts that as incomes

    increase in South Asia, there will be a 4 per cent decline in rice

    consumption between 2000 and 2050, while the consumption of

    vegetables is projectedto increase by 70per cent, andconsumption

    of meat, eggs, and fish is projected to double.

    The growing global demand for meat products has implications

    for the grain and protein feed markets. Trostle (2008) suggests

    that producing 1 kg of chicken, pork and beef requires to 2.6, 6.5

    and 7 kg of maize feed, respectively. So the increase in demand

    for meat will have far-reaching consequences for the demand for

    cereals and coarse grains for animal feeds. Analysis suggests that

    other countries and regions than the UK may have comparative

    advantagesin the production of bulkagriculturalcommoditiessuch

    as wheat, plant oils and beef. However, these potentials may be

    threatened by climate change, and the UK may be able to gain

    advantage in markets that differentiate on food quality rather than

    price. Strong international prices for commodities could maintain

    a high demand for land use for agriculture in the UK, in substi-

    tuting for expensive imports and in supplying high-value, locally

    sourced, quality-assured products. Participating in such markets

    will require high levels of knowledge, skills and technology in UK

    farming systems.

    A key factor in the international market for food is the impact

    of bio-energy. The EU and the US both have targets for the mini-

    mum proportion of conventional road transport fuel to be met by

    renewable sources (Sugden, 2009; Somma et al., in press). Several

    studies have estimated the amount of land required to achieve the

    EU renewable transport fuel target of 10 per cent. Upham et al.

    (2009) estimated that meeting biofuel targets with oilseed rape

    would need 600,000 ha of current agricultural land and an addi-

    tional 840,000ha of land which is now unused. To meet thesetargets from a sugar beet feedstock would require 10 per cent

    of UK arable land and from straw would require 45 per cent of

    UK arable land. There appears to be a direct link between biofuel

    demand and the price of crude oil, creating a trade-off between

    food and fuel production (Senauer, 2008). Fossil fuel prices are

    expected to increase in real terms in future, thus maintaining the

    demand for biofuels (Davis, 2009). However, it is likely that atten-

    tion will switch from conventional crops to second generation

    biomass crops such as miscanthus and willow, much of which can

    be grown on poorer land, although they can be water-intensive

    (Cannell, 2005).

    Forecasts for land use

    The sections above have reviewed the main drivers of UK agri-

    cultural change, citing evidence of the way in which they have

    shaped current land use and how they may change land use in

    the future. The main issue is an emerging conflict over agricul-

    tural land use forfood, fuel andecosystemservices. There aresome

    complementarities in the production of these separate outputs, but

    competition is more commonly the case, and it will be necessaryto

    establish the significant trade-offs. However, it is difficult to pre-

    dict the future conditions for agriculture. The prices of all main

    commodities have shown much volatility in recent years (Fig. 9).

    FAO and OECD (2008) forecasts suggest that the prices for the UKs

    major agricultural products will remain strong to 2017 (Fig. 9).

    This reflects growing food andfuel demand andgovernment policy

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    Fig. 9. World price for wheat, oilseed, and butter as recorded from 1992 to 2008

    by OECD-FAO, and from 2009 to 2018 as predicted by OECD-FAO in January 2009

    (OECD, 2009).

    interventions thathave reduced supply but enhanced environmen-

    tal protection. Overall, long-term prices are predicted to remain

    about 2530 per cent higher than 20032006 international lev-

    els. Therefore, it is reasonable to predict a future where there is

    strong demand for agricultural products, and where demand for

    ecosystemservices including forestry production is also increasing.

    Agriculture, multi-functionality and ecosystems

    It is recognised that agricultures role in society extends beyond

    theproduction of food andfibre andthat agriculturalpractices pro-

    duce food alongside cultural and environmental services as joint

    products (Hodge, 2007). Specifically, agriculture provides man-agement (for better or for worse) of renewable natural resources,

    regulates hydrological flows, enhances landscape aesthetics, con-

    serves biodiversity, and contributes towards the socio-economic

    viability of rural areas (Renting et al., 2009). Many of these

    services are not priced and appropriately valued within mar-

    ket economies, and consequently such public goods must be

    supported by government intervention. For this reason, policies

    such as the agri-environment schemes discussed earlier, have

    been devised to pay farmers for producing these valuable ser-

    vices.

    In this context, the multifunctional role of agriculture has

    become a political issue, seen by some as a useful means of ensur-

    ing the supply of important countryside goods, and by others as a

    dubious mechanismfor covertly subsidising agriculture (Potter and

    Tilsey, 2007). EU payments to farmers for the provision of a range

    of countryside services, and the concept of multi-functionality,

    have found resonance among some participants within the World

    Trade Organization debate on agricultural market liberalisation. It

    is expected that EU and UK policy will continue to target financial

    support for agricultural practices that deliver countryside services,

    rather than subsidising food and fibre production.

    The concept of multifunctional agriculture accords with the

    recognition that environmental policy needs to take an ecosys-

    tems approach (Defra, 2007). Attempts to produce environmental

    accounts for agriculture in the UK confirm the range of positive

    and negative externalimpacts thatagriculture has on the environ-

    ment (Prettyet al., 2000; Hartridge andPearce, 2001;Environment

    Agency, 2002; Eftec, 2004). Estimatesfor 2007(JSACCU, 2008) show

    that UK agriculture generatesa netpositive environmental value of

    around 650 million per year, although this probably significantly

    underestimates the value of managed landscapes. But agriculture

    is also associated with damage from greenhouse gas emissions

    estimated at 2.07 billion per year, or 37 per capita of the UK

    population. Future UK government and EU policies are likely to

    financially reward the provision of ecosystems by an incentives

    approach to public good provision, and punish the production of

    negative externalities such as pollutionand natural resource degra-

    dation by punitive polluter-pays taxes.

    Future agricultural land use: the case of England and Wales

    A number of studies have explored alternative futures for agri-

    culture in the UK, with implications for land use. An example of

    how farming and land use could change as a result of changes

    in the drivers affecting the demand for agricultural commodities

    and land management is contained in Morris et al. (2005). Possible

    future scenarios for agriculture in England and Wales were drawn

    up through to 2050. These were based on those used by the Fore-

    sight Programme (Berkhout andHertin, 2002; OST, 2002), in which

    futures are distinguished in terms of social values and governance.

    Four scenarios, World Markets (WM), Global Sustainability (GS),National Enterprise (NE) and Local Stewardship (LS) were used

    to define possible agricultural futures, recognising the dominant

    influence of the agricultural policy regime as a key driver of agri-

    cultural change (Table 7). A Business as Usual case was included

    to represent a continuation of the existing regime.

    Informed by an analysis of historical trends, and drawing on lit-

    erature andexpert opinion (Sylvester-Bradley and Wiseman, 2005;

    Morris et al., 2005), estimates of crop and livestock yields were

    derived for the scenarios. Commodity prices, the use of production

    inputs including management expertise, farm size, and the adop-

    tionof genetechnologywere allassumedto be positivelycorrelated

    with yields, whereas input prices, environmental regulation, adop-

    tion of organics and business uncertainty were perceived to have

    a negative association with yields. These influencing factors were

    Table 7

    Links between foresight and agricultural policy scenarios.

    Foresight scenario Agricultural policy scenario Intervention regime

    Business as Usual (BAU) Baseline Moderate: Existing price and income support, export subsidies, with selected

    agri-environment schemes

    World Markets (WM) World Agricultural Markets (without CAP) Zero: Free trade: no intervention: entirely market-driven

    Global Sustainability (GS) Global Sustainable Agriculture (Reformed CAP) Low: Market orientation with targeted sustainability compliance

    requirements and programmes

    National Enterprise (NE) National Agricultural Markets (Similar to pre-reform CAP) Moderate to High: Price support and protection to serve national and local

    priorities for self-sufficiency, limited environmental concern

    Local Stewardship (LS) Local Community Agriculture High: Locally defined support schemes reflecting local priorities for food

    production, incomes and environment

    Source: Morris et al. (2005).

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    A. Angus et al. / Land Use Policy 26S (2009) S230S242 S239

    Table 8

    Estimated change in demand for agricultural commodities to be met from domestic sources for a Business as Usual (BAU) and four contrasting governance and social value

    scenarios for 2050 (2002 = 100).

    Scenario

    BAU World Market Global Sustainability National Enterprise Local Stewardship

    Wheat 117 98 137 142 129

    Barley 112 93 113 134 103

    Oilseed rape 172 153 212 186 184Sugar beet 80 67 70 134 120

    Potatoes 98 82 108 156 146

    Peas 38 9 22 124 185

    Beans 38 9 22 124 185

    Beef 134 119 106 155 135

    Dairy (milk) 102 81 104 115 142

    Sheep meat 118 140 119 174 119

    Pork 130 161 213 180 151

    Chicken meat 131 144 151 147 131

    Source: Morris et al. (2005).

    then mapped out for each scenario. Scenario assumptions were

    also developed for the major drivers of demand such as changes

    in demographics and income, dietary trends, and demand for bio-

    energy.

    The resulting estimates of demand for agricultural commoditiesto be met from domestic sources in 2050, inclusive of bio-energy

    crops, are shown in Table 8, expressed as a percentage of those for

    2002. It is noted that demand for domestic produce is lower under

    the BAU and WM scenarios than in others, although details vary,

    reflecting the greater proportion of imports.

    The analysis provides a number of useful insights. Land use

    modelling involving an optimisation process (Annetts and Audsley,

    2002) derived commodity prices that are sufficiently attractive to

    farmers to balance domestic demand and domestic supply, assum-

    ing likely levels of imports for each scenario. As expected, prices

    arehigher under scenarioswhichhave thegreatestprotectionfrom

    imports anda high degreeof self-sufficiency. Commodityprices for

    cereals, oil seeds and sugar beet are generally higher where energy

    crops are included in scenarios than when they are not. Quantitiesand prices for protein crops fall as a consequence of competition

    from oil seed residues in animal feed markets. Under BAU, because

    of increased yields and increased imports, cereal prices fall to 60

    per cent of 20022004 prices, and sugar beet prices are more than

    halved. For the assumed WM scenario, there is a long-term decline

    in most commodity prices in the face of competition from imports.

    The GS scenario shows moderate increases in demand for cere-

    als and oil seeds relative to the current situation and BAU. As a

    consequence, prices are strong, increasing by 50 per cent in the

    case of cereals. The demand for oilseed rape cannot be met from

    domestic sources. Under NE, there is strong demand for a broad

    range of commodities to be met from domestic sources. Under LS,

    prices are high because of persistent supply deficits in cereals and

    oil seeds, mainly attributable to low yields. It is likely there wouldbe pressure to increase yields or imports.

    These possible futures have major implications for land use.

    Fig. 10 shows the proportion of total potentially suitable land that

    is used for intensive farming under the future scenarios for 2050

    compared with the current (2002) case (Fig. 10 includes energy

    cropping). Land requirements vary between scenarios. Land use

    declines as a percentage of current land use under WM, BAU and

    NE.It falls to65 percentof current useunderthe WMscenario,with

    the greatest release of land in areas currently dominated by cereal

    production and grassland for dairying. However, there is insuffi-

    cient land to meet the demand for agricultural commodities under

    GS and LS, partly because of high demand for energy crops under

    GS, and the relatively low yields under LS. Pressure on land in the

    lowlands puts pressure on the uplands, which deliver that part of

    domestic demandfor livestock products that is notmet by thelow-

    land sector. Stocking rates in the uplands typically fall by 3050

    per cent in some regions under scenarios such as WM, which also

    resultin a release of lowland farmland.Under LS,however, a short-

    age of capacity in the lowlands increases pressure on the uplandsand leads to a theoretical doubling of upland stocking rates.

    The results of this horizon-scanning exercise must be treated

    with caution. But they show how future land use and the inten-

    sity of land management could vary with changes in national and

    global circumstances thataffect the demand for,and supply of, agri-

    cultural products, as well as the other services provided by land.

    Recent policy changes suggest a move towards the Global Sus-

    tainability scenario, which promotes internationally competitive

    agriculture which has a commitment to the protection of the envi-

    ronment, as well as to vulnerable rural communities. With high

    international prices for food, and an increase in domestic biofuel

    production, this scenario suggests a continuedhigh demandfor the

    use of land for farming in the UK.

    Other views on future land use

    There are a limited number of studies that project the pat-

    tern of future UK agricultural land use. Centre for Rural Economics

    Research (2004) used literature review and expert judgement to

    estimate the likely changes in agricultural land use across England

    and Wales to 2015 under a Business as Usual Scenario but allowing

    for the Agenda 2000 reforms. Broadly it predicted that the area of

    agricultural land would decline by 3 per cent in England and Wales

    Fig. 10. Effect of Business as Usual (BAU) and four other social and governance

    scenariosWorld Markets(WM), NationalEnterprise(NE), Global Sustainability (GS)

    andLocalStewardship(LS)on theproportionof lowlandagricultural landin England

    and Wales required for agricultural production in 2050 (after Morris et al., 2005).

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    S240 A. Angus et al. / Land Use Policy 26S (2009) S230S242

    between 2002 and 2015. Within this, there would be a 10 and 2

    per cent reduction of temporary and permanentgrassland, respec-

    tively. Theagricultural area is projectedto decrease over theperiod

    in all regions, but most quickly in the South East (5 per cent) and

    Eastern regions (3 per cent) and slowest in the North East (2 per

    cent) and Yorkshire and Humber (2.5 per cent).

    The same reportpredicted a reductionin outputfrom most live-

    stock sectors. The beef herd was reduced by 15 per cent between2002 and 2015, and dairy production declined by 20 per cent over

    the period. Pig and sheep numbers were down over the period by

    10 and 6 per cent, respectively. Only poultry numbers were pro-

    jected to increase, by 8 per cent. In terms of crops, wheat and oats

    production were projected to increase by 11 and 2 per cent, with

    all other cereals remaining stable across the period. The area of

    protein crops was predicted to remain constant. Potato outputwas

    projected to decrease by 10 per cent while oilseed rape and maize

    output were projected to increase by 15 and 30 per cent. There

    was a projected fall in the output of most horticultural crops by 20

    per cent over the period, with field vegetable output 19 per cent

    down and fruit down by 20 per cent. Farm woodland is projected

    to increase by 17 per cent.

    Other projections of the long-term land use implications of

    agricultural change have been made at a European scale. These

    have mostly been scenario-based studies, which have attempted

    to project possible land use patterns under different trajectories

    of socio-economic and environmental development. Several stud-

    ies have used the SRES scenarios (similar to those described in

    Table 6), which include a set of qualitative descriptors devel-

    oped by the IPCC (2001). Rounsevell et al. (2005) and Ewart et

    al. (2005) both used these scenarios in combination with a sim-

    ple supply/demand model which calculates land use change given

    relative changes in the demand for agricultural commodities and

    the productivity of agriculture. This approach was based on a set

    of assumptions regarding climate change, economic development

    and agricultural technologyadvancement.The model findings from

    Ewart et al. (2005) predicted that at the EU level, increases in pro-

    ductivitywouldoutstripgrowth in demand. Based on these results,Rounsevell et al. (2005) projected that large areas of land would be

    taken outof agriculturalproduction,with surplus land moving into

    urban, forestry and recreational uses. They view this as being con-

    sistent with previous land use trends, where, even with subsidies,

    the area of agricultural land in Europe decreased by 13 per cent

    between 1960 and 2000.

    Studies by Meijl et al. (2006) and Eickhout et al. (2007) use the

    GTAP econometric model to determine land use change across the

    EU under the SRES scenarios. They found that the area of arable

    land decreased under scenarios depicting liberalised agriculture.

    This area remained stable over the period where CAP offered some

    protection to agricultural production. Land moves from arable

    to livestock production in the liberalised scenarios, as demand

    fromdevelopingcountries incentivisesthe production of meat. Thestudy concluded that the loss of agricultural land would be minor,

    although there would be a relative shift in the profitability of some

    sectors. Arable land could be used for biofuel production, main-

    taining livelihoods in this sector, while liberalisation could cause a

    collapse in the EU sugar sector.

    A modelling exercise by Verburg et al. (2006) used the SRES

    scenarios to predict land use change, this time for the period

    20002030. They predicted a high level of abandonment of agri-

    cultural land in the future, ranging from 2.5 to 13 per cent of the

    agricultural area of the EU-15 in 2000. This abandonment was

    more pronounced for the scenarios where agriculture is exposed

    to a liberalised world market. This loss would be more pronounced

    near large urban conurbations, where there is pressure for urban

    growth.

    The general findings from this range of forecasting studies

    are that land in the UK will continue to move out of agricul-

    ture, because of demands for other uses or because some types

    of farming are no longer viable. However, this outlook depends on

    demands from the global market and the viability of farming. Most

    horizon-scanning studies, conducted before the global food price

    spikes of 20072008, predicted some degree of agricultural land

    abandonment in the UK and EU under a liberalised world market

    regime, in response to falling real prices for raw food. But they

    also recognise that higher commodity prices might arise, caused

    by strong global demand for food and biofuels, and possible con-

    straints on some typesof intensivefarming.Under such conditions,

    there could be strong demand for agricultural land in the UK, pro-

    ducing for domestic needs or for export. As we mentioned above,

    more recent FAO/OECD forecasts predict strengthening food and

    bio-energy prices over the next 15 years or so. These could pro-

    vide sufficient incentives for UK farmers, especially those with

    comparative advantage in relatively large scale, intensive farming

    systems.

    Conclusions

    This review has argued that future land use in the UK is likely

    to be shaped by two main forces: agricultural and environmental

    policy and the market for agricultural and food products. There

    may in future be a clearer distinction between agricultural policy

    and rural environment policy.

    It seems likely that future policy will be mainly directed to non-

    market issues of natural resource and environmental protection

    and the provision of environmental services. Future food produc-

    tion and its associated land use pattern will be largely determined

    by economic forces operating in the food market and the price

    signals they send. Given reform of the CAP and the decoupling of

    support fromfarm production, additional foodproduction in the UK

    and elsewhere in Europe will probably be stimulated by the mar-

    ketrather than by policy. In this respect, EU farmers will respond tochanges in product prices, input prices and profitability opportu-

    nities, and the aggregate impact of their behaviour will determine

    whether crop and livestock outputs increase, fall or remain con-

    stant.

    Policy will primarily be directed to environmental impacts,

    including the need to meet demanding targets for improved water

    quality, atmospheric pollution containment and biodiversity. The

    key contemporary concerns of climate change, sustainability,

    maintenance of the natural resource base and future food secu-

    rity should be seen in this context. Food security, self-sufficiency

    and import penetration will be driven by forces operating in

    global food and agricultural markets. Environmental targets will

    be achieved by largely non-market, EU and UK government pol-

    icy.Policywillalsoaffectlanduse viathe technologiesusedin future

    agricultural production (see Burgess and Morris, in press). Future

    farming will be determined in part by technology which, in turn,

    depends upon Research and Development (R&D). Investment in

    R&D will continue to be made in both the public and private sec-

    tors. Theformer is mainly drivenby publicinterestin topicssuch as

    environmental protection, food quality and food safety, and the lat-

    ter by business opportunities.Decisions madetoday in private- and

    publicly-funded research organisations have an important influ-

    ence on the technologies which will be available to farmers in the

    future.

    It will probably continue to be a valid use of public funds to

    maintain and develop the knowledge and technological capacity

    that UK agriculture needs to cope with climate changeor food secu-

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    A. Angus et al. / Land Use Policy 26S (2009) S230S242 S241

    rity. For example, the permissible roles and regulation of GM crops

    and of pesticide use could have important impacts on land use (see

    Burgess and Morris, in press).

    A range of plausiblefutures each have their ownimplications for

    the role of agriculture and rural land management. Much depends

    on a combination of UK national demographic and economic fac-

    tors, and on global conditions as they shape the incentives to

    farmers in the UK. It seems likely that over the next 50 years, the

    UKs land area will be required to deliver an increasingly diverse

    range of private and public goods to meet growing human needs

    and aspirations. This will require a balance of policy-driven goals

    and market-driven forces. In particular it will require a much

    improved understanding of the trade-offs between foodproduction

    and environmental goals, and of the institutional arrangements

    required to achieve a balance of economic, social and environmen-

    tal outcomes.

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